Benefitting from EU Structural and Investment Funds 2014-2020

The new European Structural and Investment Funds programme for London for 2014-20 is currently being negotiated with central government. The programme will provide significant investment (£641 million) in the capital for projects to promote employment and social inclusion, develop skills and lifelong learning, strengthen research and innovation, enhance the competitiveness of SMEs and support a low carbon economy. This briefing provides an overview of the programme and the opportunities for London boroughs to benefit from it.

Overview

London benefits from two main EU structural funds: the European Social Fund (ESF) and the European Regional Development Fund (ERDF). ESF is designed to promote social inclusion and improve people’s employment opportunities through skills training and other support. ERDF is intended to improve regional and local economic competitiveness, as well as supporting a low carbon economy. The government is referring to these funds collectively as European Structural and Investment Funds (ESIF).

London boroughs benefit from the funds in a number of ways – accessing funding for local schemes; influencing the content of some European programmes so they are more responsive to local circumstances; and - with London Councils acting as an ESF Co-Financing Organisation on behalf of the boroughs - running programmes that address borough priorities.

The government will run a national programme for ESIF for the new 2014-2020 programme. However, Local Enterprise Partnerships are setting priorities for the funds in their areas and have been asked to identify match funding that is needed to draw down ESIF. The London Enterprise Panel (LEP) recently submitted its proposed strategy and priorities for the 2014-2020 programme to government. The arrangements in London are different to the rest of England because we have regional government and a Mayor. The GLA will act as an intermediary body for the funds in London, locally managing them and setting priorities within the national framework with the LEP.

Analysis

London Councils has been working to ensure that the interests of London boroughs are promoted and included in London’s new ESIF programme. This work has included four main strands:

1. Maximising London’s ESIF share for the 2014-2020 programme

The LEP has been allocated €784.9 million (£641 million) for the 2014-2020 programme. This is

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1 This is usually 50 per cent of the total project cost 2 Through its European Programmes Management Unit (EPMU) an 11 per cent increase on the amount of funding London received in the last programme, and sits within the context of an overall reduction in the EU budget for the period 2014-2020. The size of the allocation is a testament to the effective lobbying that London local government carried out around ESIF.

An additional €37 million has also been allocated to London for the Youth Employment Initiative (YEI) to provide extra funding to reinforce support available to young people through ESF. YEI is being targeted at regions which had youth unemployment rates above 25 per cent in 2012. Five regions in the UK are eligible, including Inner London. The LEP is currently looking at how funding might be made available for projects in other parts of London as well.

2. Ensuring the new programme allows for investment in boroughs’ economic, social and environmental priorities.

London Councils has worked with London boroughs to identify priorities for ESF and ERDF feeding these into the LEP’s ESIF strategy.

The new ESF programme will focus on three thematic objectives:

1. Promoting employment and supporting labour mobility
2. Promoting social inclusion and combating poverty
3. Investing in education, skills and lifelong learning

Reflecting boroughs’ priorities, the proposed activities for London’s ESF programme include:

- Targeted employability programmes for long-term and disadvantaged workless groups
- Job-readiness and pre-apprenticeship support
- Tailored support for hard to reach pre-NEETS and NEETs
- Promoting a stronger locally-driven careers offer
- Supporting jobless/low income households and disadvantaged families to reduce child poverty through improved employability
- Interventions focused on progression in work and learning for low skilled/low pay groups
- Progression onto intermediate, higher level and/or advanced skills training.

The new ERDF programme will focus on four thematic objectives:

1. Strengthening research, technological development and innovation
2. Enhancing access to and use and quality of Information and Communication Technologies
3. Enhancing the competitiveness of SMEs
4. Supporting the shift towards a low-carbon economy

The proposed activities for these thematic objectives, reflecting borough priorities, include:

- Developing links between businesses, research and public institutions
- Commercialising innovation by helping to bring new products and processes to the market
- Promoting low carbon/resource efficiency technologies
- Promoting the take-up and exploitation by SMEs of digital technologies
- Supporting London enterprises to access finance, boost the skills of their workforce, seek new market opportunities, and increase productivity
- Promoting waste reduction, and energy and water efficient processes among businesses
- Enhancing research and innovation infrastructure
- Addressing gaps in the provision of incubators, grow-on space and support services
- Enhancing the quality and use of London’s high speed communication networks
- Supporting low carbon infrastructure
- Providing integrated place-based solutions to unlock growth in deprived urban areas.
- Promoting opportunities leading to self-employment, business start-ups and business growth.

3 The eligible councils are: Camden, City of London, Hackney, Hammersmith and Fulham, Haringey, Islington, Kensington and Chelsea, Lambeth, Lewisham, Newham, Southwark, Tower Hamlets, Wandsworth and Westminster. 4 Further details are provided in the appendix 5 Ibid Match funding for ESIF can come from both the public and private sectors, including national government. The government has published a prospectus for LEPs to consider whether to ‘opt in’ to proposals from national organisations or programmes proposing to act as Co-Financing Organisations (CFOs). These include the Skills Funding Agency; the Big Lottery Fund; UK Trade and Investment, the Department for Work and Pensions (DWP) and others.

In the last programme, national CFOs focused on national rather than local priorities and did not always provide regular updates on how their programmes were performing in London. London Councils and the GLA have therefore been holding discussions with prospective CFOs to:

- Determine whether to advise the LEP to opt-in to these national proposals.
- Negotiate for more local input and determination of the priorities and activities of the CFOs.
- Ask for regular clear performance data for London to be reported to the LEP and key partners.

London Councils is a CFO managing a number of ESF programmes on behalf of the boroughs. It uses funding from the borough grants programme to draw down ESF, allowing London boroughs to opt-in and access additional ESF funding to invest in employment support programmes. To date London Councils ESF programmes have brought in £13 million of ESF and supported over 8,400 Londoners into work or to progress in learning. For the new programme, London Councils’ ESF programme will focus on economically inactive people with many barriers to getting a job who are not well catered for by mainstream employment programmes.

3. Ensuring London local government gains an early and significant role in the development and management of new programmes.

Under the existing programme for 2010-13, ESF is managed nationally by the DWP, while ERDF is managed by the Department for Communities and Local Government (CLG) with partial devolution of responsibility to the GLA. It is expected that a similar approach will be taken for both ESF and ERDF for the new programme for 2014–2020. The GLA will manage the programme, setting priorities through the LEP and selecting projects for funding, but these will need to be agreed with national government as well. For the current programme, a Local Management Committee (LMC) was established in London to oversee this process. The LMC is a very wide cross-sector partnership. London Councils is arguing for a greater role in developing and managing programmes, potentially with a joint GLA: London Councils Strategic Group making recommendations to the LEP or a wider forum.

4. Making the case for simplification of ESF and ERDF management.

Management of EU programmes can be over-bureaucratic and simplification is a key issue for boroughs engaging in the programmes. The European Commission has published some initial proposals to support the simplification and alignment of future EU programmes. There is a need for simplification at UK level as well to reduce audit and other burdens. ERDF is particularly complex. Consequently London Councils is exploring the main barriers to managing ERDF programmes, including addressing complex mechanisms for calculating overhead costs, achieving efficiencies in the GLA’s approach to receiving and approving claims for payments, and creative approaches to identifying match funding. London Councils will make proposals around simplification to government and the GLA.

Commentary

ESIF have become increasingly important in London as domestic government funding to support employment and skills, regeneration and competitiveness has significantly reduced. Generating local jobs and economic growth, supporting business and making sure residents are equipped to benefit from these opportunities are key priorities for London boroughs. EU Structural Funds can help make these happen.

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6 European Investment Bank (social housing financial instrument), GrowthAccelerator programme, the Manufacturing Advisory Service, Arts Council England and the Prince’s Trust. 7 Under the priority to tackle poverty through employment training. 8 Current spend figures against an allocation of £25.3 million ESF from April 2008 to November 2015 9 These include: harmonising rules between ESF and ERDF, ensuring that projects under £100,000 are audited only once, and lighter reporting to the Commission. Examples of ESF projects under the current programme: The Job Shop Community Outreach project in Barking and Dagenham is enabling local people to access employer job vacancies, accredited ESOL at level 1 and 2, Construction Sills Certificate Scheme, Security Industry Authority, food hygiene, employability and soft skills training, as part of an intensive package of support to place them into sustainable jobs or further training.

Kingston Workstart is providing employment support to those with a mental health difficulty regardless of diagnosis, benefits received or employment status. The service is adopting a person centred approach to accommodate the needs of the participant in order to help them to seek and sustain employment.

The Working Towards Self-Employment Project is supporting out-of-work clients in Westminster in taking steps to become self-employed for a sustained period. The project is targeting residents who face significant disadvantages in the labour market and is providing workshops and business counselling services in partnership with Business Information Points in four Westminster libraries.

Examples of ERDF projects under the current programme: Greening SMEs is a £750,000 project to improve the environmental performance of 250 SMEs in Wandsworth, Southwark, Kensington and Chelsea, Barking and Dagenham, Richmond and Merton, through a one to one support service for businesses delivered by specialist advisers. The project involves undertaking ‘green’ diagnostics with businesses, developing environmental improvement action plans and supporting businesses to implement them. The project is targeting SMEs in the partner boroughs with an additional focus on businesses which are owned/managed by women and by people from black, Asian and other ethnic minority communities.

The Heathrow Area Supply Chains project involved a £295,000 investment to help 250 SMEs in Hillingdon, Ealing and Hounslow to access major local supply chains, including those at Heathrow Airport and in the public sector. It was delivered by a partnership led by Hillingdon, and including BAA Heathrow, that has been collaborating since 1997 on supply chain programmes in the Heathrow area.

To take advantage of the new ESIF programme boroughs need to start identifying sources of match funding and pipeline projects that could effectively use EU funding to generate local economic growth when the new programme starts in late 2014. London Councils has already gathered some information on this from boroughs and will continue to do so. Boroughs can also discuss potential projects directly with the EPMU. There is also an opportunity for boroughs to further inform the LEP’s ESIF strategy for 2014-2020 by taking part in the public consultation on the draft document which runs until 15 November 2013.

Author: Souraya Ali, Principal Policy and Project Officer (T: 020 7934 9916) Click here to send a comment or query to the author

Links: 2014-2020 European Structural and Investment Funds Strategy - Consultation 2014-2020 Draft European Structural and Investment Funds Strategy for London The Development and Delivery of European Structural and Investment Fund Strategies: Supplementary Guidance to LEPs European Structural and Investment Fund Strategies: Opt-in Prospectuses

This member briefing has been circulated to: Portfolio holders and those members who requested policy briefings in the following categories: Economic Development, Local Government Finance

London Councils, 59½ Southwark Street, London SE1 0AL www.londoncouncils.gov.uk Appendix

The proposed activities for London’s ESF programme include:

- **Targeted employability programmes** for long-term and disadvantaged workless groups particularly those not accessing the Work Programme or other mainstream provision.
- **Job-readiness and pre-apprenticeship support** including work experience and traineeships to aid progression onto apprenticeships and sustainable employment. Business support for SMEs to take on apprentices and provide good quality work placements.
- **Tailored support for hard to reach pre-NEETS and NEETS** including refugee/ migrant children, children in care/ care leavers and those with care responsibilities to remain in or progress into employment, education or training.
- **Intensive support for the most disengaged young people** to overcome social and economic barriers and become job ready, including those excluded from school, with no qualifications, with mental health issues or disabilities, or involved in anti-social or gang-related activity.
- **Brokering opportunities for young people and supporting local employers to take on those not participating in education, employment or training** to progress into work or secure good quality work placements, graduate placements and/ or internships.
- **Promoting a stronger locally-driven careers offer** which responds more effectively to the needs of Londoners in particular NEET young people aged 16-17.
- **Supporting jobless/ low income households and disadvantaged families to reduce child poverty through improved employability**, including tailored support for parents and carers returning to work.
- **Interventions focused on progression in work and learning for low skilled/ low pay groups**, including basic skills development for those in need of Literacy, Numeracy and ESOL through innovative approaches to training.
- **Progression onto intermediate, higher level and/or advanced skills training** including apprenticeships to meet the needs of new and existing industries.

The proposed activities for London’s ERDF programme include:

- **Developing links between businesses, research and public institutions**, including graduate schemes, support for HEI spin-outs, business-to-business collaborations, and technology transfer.
- **Commercialising innovation** by funding projects that help bring new products and business processes to the market.
- **Promoting the development and deployment of low carbon/resource efficiency technologies** through commercialisation of low carbon products and processes.
- **Promoting the take-up and exploitation by SMEs of digital technologies**, both in terms of supply of new digital products and services, and in terms of demand and smart use of these technologies.
- **Removing London enterprises’ barriers to growth** by helping them to access finance, boost the skills of their workforce, seek new market opportunities, and increase productivity.
- **Promoting innovative measures and best practice in waste reduction, energy and water efficient processes** among businesses.
- **Enhancing research and innovation infrastructure** including incubation space for enterprises active in innovation linked to research institutions.
- **Addressing geographical, sectorial or other gaps in the provision of incubators, accelerators, grow-on space and support services.**
- **Enhancing the quality and use of London’s high speed communication networks** where the market is failing, particularly where this is proving a barrier to business growth.
- **Supporting low carbon infrastructure** through investment in the development and delivery of energy and water efficiency measures in residential, public and commercial buildings; renewable energy technology, decentralised energy systems and waste infrastructure.
- **Providing integrated place-based solutions** to unlock growth in deprived urban areas.
- **Promoting opportunities leading to self-employment, business start-ups and business growth** including the social investment market through skills training.